Record high food prices stoke fears for economy

Neil Fullick and Peter Apps
Reuters

Record high food prices are moving to the top of policymaker agendas, driven by fears it could stoke inflation, protectionism and unrest and dent consumer demand in key emerging economies.

The United Nations’ food agency (FAO) said on Wednesday that food prices hit a record high last month, above 2008 levels when riots broke out in countries as far afield as Egypt, Cameroon and Haiti.

In Asia, official data and analyst estimates both pointed to inflationary pressures. Chilli prices have increased fivefold in Thailand in the last year and Indonesia’s president called for households to plant food in their own gardens.

President Susilo Yudhoyono Bambang told a cabinet meeting people should be “creative” in planting, with Trade Minister Mari Pangestu leading the way in planting at home.

“I have 200 chilli plants in flowerpots,” Pangestu told a briefing on Thursday. “The agriculture ministry is informing farmers how to take care of the plant and also encouraging consumers to plant chilli in their own yards.”

Surging food prices have often provoked unrest in urban areas of poor countries, where food makes up a high proportion of household purchases.

Analysts say African and Caribbean economies dependent on food exports could be particularly hard hit, helping stoke unrest and potentially pushing governments toward imposing export bans and expropriating foreign-owned farmland.

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